Tuesday, #32: where is my money?

As the if around the eurozone-breakup becomes less and less of an absurdity (or maybe more and more of a plausible absurdity), the guys at Nomura sat down to figure out what the original European currencies could look like, if we were to go back to them. There are many reasons this projection is hypothetical. One of them is that in case of a breakup, some countries’ currencies, such as the Deutsche Mark or maybe the Dutch guilder, might appreciate much more in value than ‘feasible’, because of the relative economic strength of their countries. Where do the numbers that were used come from? It’s the real effective exchange rates + risk of inflation. Here the graph, here the article

While Merkel and Sarkozy worked on their master plan yesterday, S&P threatened to engage in another excessive downgrading round (it’s countries as opposed to banks this time, even Germany), which could be construed as a warning shot for the EU to hurry the fuck up.

Mario Monti proposed a €30bn austerity package, that made everyone feel better and borrowing for Italy cheaper (i.e. yields went down). First reaction from the general [Italian] public: a strike. Unions fear a rise of the retirement age (currently 65, or 60 for women in the private sector) and a cut in pensions. They don’t fear the total collapse of their economy, or so it seems… read article

All of this outshone the new Irish budget, whichproposes a €3.8bn (please compare to 30bn above) austerity package with cuts in healthcare and welfare. There will be an increase in sales tax and a reduction of overtime wages, but also, if everything works out, a reduction of public debt from 10.3% this year to 8.6% in 2012. The goal is a 3% deficit [of GDP] over the next couple of years. So maybe the reason nobody got excited was that these cuts are just the first of many, many to come.

Michael Lewisdiscusses strategic choices of the 1% to turn the pay-gap back into a safe distance between the money they have and the others want. Humorous reading entertainment, if you don’t break out in emotion-infused lecturing upon hearing about the 99%. read article